BoA alone was responsible for one fifth of all US coal financing by the top 25 banks and financial institutions.
“Our new policy reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally,” the bank’s head of corporate social responsibility Andrew Plepler said.
Though it has not yet set a timeline for its withdrawal from coal financing, the bank did officially put its new commitment in writing, stating: “Bank of America will continue to reduce our credit exposure to coal extraction companies. This commitment applies globally, to companies focused on coal extraction and to divisions of diversified a mining companies that are focused on coal.”
The policy also explicitly states that mountaintop removal and other forms of more extreme coal mining are to be phased out of its portfolio.
The announcement comes amid a growing fossil fuel divestment movement, in which universities, churches and large asset owners are being pressured to abandon or curb their investments in high-carbon energy.
AGL Energy recently announced a plan to phase out its coal-fired power generation interests by 2050.
Last month HSBC said that the recent drop in energy prices had put a spotlight on stranded fossil fuel assets, making them a risk to investors.
BoA’s new policy arose from pressure from the divestment movement in the US.
"From these engagements, we have developed a coal policy that will ensure that Bank of America plays a continued role in promoting the responsible use of coal and other energy sources, while balancing the risks and opportunities to our shareholders and the communities we serve," it said in a statement.
Coal represents less than 40% of the US’s energy mix, but 80% of climate emissions from the electricity generation sector.
BoA admits untangling is relationship with coal will take some time to implement.
Financing will need to come from other sources, and the anti-coal Rainforest Action Network, BankTrack and the Sierra Club found that global banks pumped $US70 billion into coal mining operations in 2014 – up from $US55 billion the previous year last year.